pls read if you have a chance , page-4

pieces

There are lots of things to watch. A key indicator will be rising medium term interest rates of US govt bonds (Bernanke controls short term interest rates only), perhaps because of increasing inflation expectations. In addition, high commodity prices, principally oil, can choke-off economic activity (the CRB is still below its 2008 peak because oil has not gone back to its previous top of almost $150/barrel). GFC1 was about the solvency of the banking system. Perhaps GFC2 will be more about the solvency of governments, now that they have taken on so much added debt. Not sure if the issues in the derivatives markets found in GFC1 have been solved so perhaps banks could again be impacted via falling asset prices as they hold so many derivative products.

I am hoping that short term interest rates are "forever" maintained below the inflation rate (ie there are negative real interest rates) because that is a positive for the gold price. Much of the speculation in China is being driven by their negative real interest rates.

I am not sure how government could cope with positive real interest rates given the size of their debts, or even higher rates (even when negative in real terms) which would require more taxation or money printing to pay the interest (a real ponzi scheme, but one created by the government "for the benefit of its citizens' welfare").

A must see are these videos posted by Shikari (Post: 6285764) on the gold thread:

"Governments dont create wealth, people do!!!


Pt. 1 - http://www.youtube.com/watch?v=7gd6-zfeeaM

Pt. 2 - http://www.youtube.com/watch?v=KrASFrpi8zA

Pt. 3 - http://www.youtube.com/watch?v=thUrVB7bFdE

Pt. 4 - http://www.youtube.com/watch?v=-kotac3meVM

Pt. 5 - http://www.youtube.com/watch?v=ZPtayYoHoCY


These should be made compulsory viewing by all politicians and students from high school level upwards.

loki